Introduction
Welcome to the Piotroski F-Score screen for November. Piotroski f-score looks for stocks of the companies with solid fundamentals that are improving. Joseph Piotroski, then of University of Chicago GSB, laid out these fundamental filters that in his research adds about 7.5% additional alpha to a standard P/B ratio screen..
Small cap stocks with improving fundamentals can unearth quality stocks and help avoid the junk.

Screen Details
This screen looks for small cap stocks between $30 million and $2 Billion in market capitalization with solid fundamentals that are getting better, as measured by Piotroski F-Score:
- Piotroski F-Score > 8
This filter does not screen for low price/book ratio or any other metric. The resulting list of stocks need to be evaluated for these additional value filters.
The Screen Results
Stock | Company | Piotroski F-Score | P/B Ratio | P/E Ratio |
---|---|---|---|---|
AXR | Amrep | 9 | 0.5 | 37.1 |
DHIL | Diamond Hill Investment Group | 9 | 2.2 | 10.9 |
HWKN | Hawkins | 9 | 2.1 | 17.7 |
NEN | New England Realty | 9 | - | 41.2 |
PDCE | PDC Energy | 9 | 0.6 | 12.5 |
WINA | Winmark | 9 | - | 23.6 |
Notes and Observations
Since valuations are not part of the Piotroski F-Score evaluation, they need to be applied before we can make any judgement on these stocks. Despite Piotroski using high book to market as his primary valuation filter, we are not really restricted to this. We are able to use all other valuation tools at our disposal. The f-score is merely a metric to describe the quality of the fundamentals of the company.
That being said, I did a quick Price/Graham Number calculation on these stocks, and find the following:
- AXR: P/GN = 0.9. The company seems to tick all the boxes for good value and financials. The P/E ratio is high and the liquidity of the stock is very low.
- DHIL: P/GN = 1. P/B ratio is high as this is a service company. This is normal for asset light companies. The rest of the financials look solid and valuation is low. Adding to the list to review further.
- HWKN: P/GN = 1.9. This stock currently sells at a richer valuation than we like.
- PDCE: P/GN = 0.6. Operational liquidity is a concern. Current ratio is mere 0.65, way less than 1.2 minimum we want. The Piotroski f-score calculation takes the current ratio into account, but only the change from the last year, which is positive. It does not mean that the absolute number is solid. Avoid for now.
NEN and WINA have negative book value and were not further evaluated.
Ending Note
I like Piotroski f-score as an additional layer of quality on the value stocks that you are evaluating. The f-score by itself is not a complete screen. Other valuation filters need to be applied along side the Piotroski f-score filters.